Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Economist’

America’s shale firms don’t give a frack about financial returns

Posted by hkarner - 27. März 2017

Date: 25-03-2017
Source: The Economist: Schumpeter

Exploration and production companies are poised to go on another investment spree

INSIDE the boardrooms and bars of Houston, the spiritual capital of America’s energy industry, the swagger is back. The oil price may only be at $48, or half the level it was three years ago. But shale fracking—the business of getting oil and gas out of rocks by blasting them with water and sand—is booming once again after the crash of 2014-16. Exploration and production (E&P) companies are about to go on an investment spree. Demand is soaring for the industry’s raw materials: sand, other people’s money, roughnecks and ice-cold beer.

Shale’s second coming is testament to Texan grit. But the industry’s never-say-die spirit may explain why it has done next to nothing about its dire finances. The business has burned up cash for 34 of the last 40 quarters, according to figures on the top 60 listed E&P firms collected by Bloomberg, a data provider. With the exception of airlines, Chinese state enterprises and Silicon Valley unicorns—private firms valued at more than $1bn—shale firms are on an unparalleled money-losing streak. About $11bn was torched in the latest quarter, as capital expenditures exceeded cashflows. The cash-burn rate may well rise again this year. Den Rest des Beitrags lesen »

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Leaving the euro would be devilishly difficult

Posted by hkarner - 25. März 2017

Date: 23-03-2017
Source: The Economist

It would not, however, be impossible

ONE BIG QUESTION has lurked throughout the euro crisis: should one or more members quit? The most obvious candidate is Greece, the country where the trouble began. It never met the criteria for joining, but its deficit and debt figures were misrepresented. And the crisis has inflicted agonies on the Greeks. Pierre Moscovici, the EU’s economic- and monetary-affairs commissioner, notes that Greece’s GDP per person has fallen by 45% since late 2009 and unemployment is nearly 50%. This is the worst performance ever by any advanced country.

Now a further row looms, over funds needed for Greece’s third bail-out this summer. The IMF reckons that Greece will never repay its debts, which currently amount to 180% of GDP and rising. Yet euro-zone creditors refuse to accept any debt relief, preferring variants of “extend and pretend” to avoid owning up to fiscal transfers. Meanwhile Greece’s government rejects more austerity, just as Greek voters did in a referendum in July 2015, only for it to be forced on them all the same. Even so, Greeks do not want to leave the euro—perhaps because for them it has become like Alcatraz: a prison that keeps people in mainly by making escape too risky. If an orderly procedure for leaving the euro were available, a Greek departure might become more attractive. Den Rest des Beitrags lesen »

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That sinking feeling

Posted by hkarner - 25. März 2017

Date: 23-03-2017
Source: The Economist

Members agree that the single currency needs more integration, But they disagree over how

MANY BRITISH TORY Eurosceptics trace their beliefs back to the 1992 Maastricht treaty which agreed to create a single currency. To them, Maastricht represented a Franco-German stitch-up. The French president, François Mitterrand, accepted German unification, and in exchange the German chancellor, Helmut Kohl, agreed to give up the D-mark for the euro.

In fact money was crucial from the very start of the European project. In the 1950s Jacques Rueff, a leading French economist, declared that “Europe will be made through a currency, or it will not be made.” After the break-up of the Bretton Woods international monetary system in 1971, European countries made many attempts, usually in vain, to ensure currency stability through such arrangements as the “snake”, the European monetary system and the exchange-rate mechanism.

A move to a single European currency may have seemed a logical extension of such efforts, yet it was far more momentous. However fixed an exchange-rate arrangement pretends to be, it can be altered at any time. Indeed, that is what happened repeatedly in the 1980s and 1990s. The point of the single currency was to put an end to such disruption. By launching the euro in 1999 and replacing national notes and coins in 2002, the EU was not just underpinning the single European market, its most successful project. It was also taking a giant leap towards deeper political and economic integration.

The design of the euro suffered from two big defects that still haunt the single currency Den Rest des Beitrags lesen »

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Italy is Europe’s leaden-toed boot

Posted by hkarner - 25. März 2017

Date: 23-03-2017
Source: The Economist: Charlemagne

The host of the EU’s 60th anniversary party is the country most likely to bring it down

THE European Union may be a Franco-German construction, but when the project needs a dose of grandiosity it invariably turns to Italy. This weekend the leaders of 27 EU countries (all bar Britain) will convene in Rome’s glorious Palazzo dei Conservatori, beneath 17th-century frescoes and flanked by sculptures of sundry popes, to proclaim their unity—60 years after their forefathers signed the Treaty of Rome, the EU’s founding document, in the same room. In today’s fractious union the symbolism counts for something, even if the declaration the leaders will issue is crushingly bland. Yet there will be a note of irony to the proceedings, for if you ask officials in Brussels or Berlin which country keeps them up at night, the answer is always the same: Italy.

Very little changes here, sighs a local who emigrated as a child and recently returned to Rome. Sadly, that includes the size of the economy. The European Commission forecasts Italian growth at 0.9% this year, the slowest in the euro zone. Since 2008 Italy has been in recession as often as not. Real income per head is lower than when Italy joined the euro in 1999, and could soon be overtaken by zippy Spain. Youth unemployment stands at 38%, and the employment rate is among the lowest in the OECD. No wonder barely half the population of this traditionally pro-European country think the euro was a good idea. Den Rest des Beitrags lesen »

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Europe at 60: Can Europe be saved?

Posted by hkarner - 24. März 2017

Date: 23-03-2017
Source: The Economist

If it is to survive, the European Union must become a lot more flexible

ON MARCH 25th 1957, with the shadow of the second world war still hanging over them, six European countries signed the founding treaty of a new sort of international club. The European Union, as the club came to be called, achieved success on a scale its founders could barely have imagined, not only underpinning peace on the continent but creating a single market as well as a single currency, and bringing into its fold ex-dictatorships to the south and ex-communist countries to the east, as it expanded from six members to 28. Yet even as today’s European leaders gather in Rome this weekend to celebrate the 60th anniversary, they know their project is in big trouble.

The threats are both external and internal. Internally, the flaws that became glaringly evident in the euro crisis have yet to be fixed. Prolonged economic pain has contributed to a plunge in support for the EU. Populist, anti-European parties are attacking the EU’s very existence—not least in France, where Marine Le Pen is doing uncomfortably well in the presidential campaign, even if the National Front leader is unlikely to win in May. The most dramatic result of the anti-EU backlash so far is Brexit. Britain’s prime minister, Theresa May, will not be in Rome for the birthday party; on May 29th she plans to invoke Article 50 of the EU treaty to start the Brexit process. Negotiations over Britain’s departure will consume much time and energy for the next two years; losing such a big member is also a huge blow to the club’s influence and credibility. Den Rest des Beitrags lesen »

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New European rules will open up retail banking

Posted by hkarner - 23. März 2017

Date: 23-03-2017
Source: The Economist

The dangers to privacy and security are outweighed by the benefits

MORE treasured than the bullion in its vaults are the data a bank has stored on its servers. Bankers know what their customers eat, where they shop and, increasingly, what they get up to online. It is possible for customers to share these data with others, but the process is cumbersome. In effect, banks enjoy a monopoly over data that has helped them get away with lousy service and fend off newcomers with better ideas. In Europe, at least, that is all about to change.

The source of this upheaval is a new set of regulations, snappily named the Second Payment Service Directive, or “PSD2”. The rules, which are being finalised and will be in force from January next year, will compel banks to share data easily with licensed third parties (if that is what their account-holders want). Bankers in Europe squeal that their profits and customer relationships are under threat. Fearing they could be next, America’s bankers are already lobbying their regulators to keep their data monopoly intact. Such reactions are predictable and wrong. Den Rest des Beitrags lesen »

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Elon Musk supercharges progress on energy storage

Posted by hkarner - 18. März 2017

Date: 16-03-2017
Source: The Economist

Australia attempts to stop blackouts using batteries

HOW much power does a tweetstorm involving two tech tycoons, the prime minister of Australia and 8.5m Twitter followers generate? Enough, at least, to supercharge a debate about the future role of batteries in the world’s energy mix.

Elon Musk, a Silicon Valley entrepreneur (pictured), may be best known for his gravity-defying ambition, but his core product is the battery: whether for his Tesla cars, for the home or for grid-scale electricity storage. He gave the last of these an unexpected jolt of publicity on March 10th, by responding to a blackout-inspired challenge on Twitter from an Australian software billionaire, Mike Cannon-Brookes. Mr Musk said he could install 100 megawatt hours (MWh) of battery storage in the state of South Australia in 100 days to help solve an energy crisis it faces, or it would be free of charge. “That serious enough for you?” he asked.

In response, Malcolm Turnbull, the prime minister, communicated with Mr Musk and appeared to turn from pro-coal sceptic into battery believer. On March 14th Jay Weatherill, the premier of South Australia, went further. Declaring that the national electricity market was “broken”, he said the state would launch its own A$550m ($415m) plan to build a 100MW battery system, as well as a gas-fired power station, with public funds. Mr Musk may have got what he wanted. He is “good at bringing nerdy subjects to a broad audience”, says Julia Attwood of Bloomberg New Energy Finance. Den Rest des Beitrags lesen »

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Chinese pharma firms target the global market

Posted by hkarner - 18. März 2017

Date: 16-03-2017
Source: The Economist

A new Chinese drug for colorectal cancer could mark an important milestone

The way things were

WALK into the Shanghai laboratories of Chi-Med, a biotech firm, and you encounter the sort of shiny, cutting-edge facilities common in any major pharma company in America, Europe or Japan. Chi-Med has just had positive results in a late-stage trial of its drug for colorectal cancer, which is called Fruquintinib. If the drug is approved both in China and in Western markets it could be the very first prescription drug to be designed and developed entirely in China that will be on a path to global commercialisation.

Given China’s ageing population, higher incomes and rising demand for health care it is clear why innovation in drugs is a priority for the country. Its national market for drugs has grown rapidly in recent years to become the world’s second-largest. It could grow from $108bn in 2015 to around $167bn by 2020, according to an estimate from America’s Department of Commerce. By comparison, America spends about $400bn a year on drugs. Den Rest des Beitrags lesen »

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Open up: The Dutch election suggests a new kind of identity politics

Posted by hkarner - 16. März 2017

Date: 16-03-2017
Source: The Economist: Charlemagne

Identity does not have to be the exclusive preserve of the far right

WILL no one stand up for the Dutch cosmopolitan elite? For many observers of this week’s election in the Netherlands there was only one story: the fate of Geert Wilders, the bottle-blond nativist who wants to ban the Koran and exit the European Union. Rare was the bar in Limburg, Mr Wilders’s home province, left unmolested by journalists expecting Dutch voters to deliver a populist hat-trick, following the triumphs of Brexit and Donald Trump. The young, educated urbanites of Amsterdam’s Canal District or Haarlem barely got a look-in. And yet in an election with many subplots, theirs was among the more arresting.

Though Mr Wilders disappointed on election day, he remains more than an irritant. With 20 seats in the new 150-seat parliament, he may well lead the opposition to whatever government emerges from the electoral mélange produced on March 15th. His vicious brand of anti-Islam populism is no less shocking for its familiarity (Mr Wilders founded his Freedom Party in 2006, and he is not the first peddler of xenophobia to Dutch voters). And opposition presents no impediment to his influence. Before the election Mr Wilders told an interviewer that by tugging other parties in his direction, he had already won. In a way, he was right. Den Rest des Beitrags lesen »

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The coming revolution in insurance

Posted by hkarner - 11. März 2017

Date: 09-03-2017
Source: The Economist

Technological change and competition disrupt a complacent industry

IN THE stormy and ever-changing world of global finance, insurance has remained a relatively placid backwater. With the notable exception of AIG, an American insurer bailed out by the taxpayer in 2008, the industry rode out the financial crisis largely unscathed. Now, however, insurers face unprecedented competitive pressure owing to technological change. This pressure is demanding not just adaptation, but transformation.

The essential product of insurance—protection, usually in the form of money, when things go wrong—has few obvious substitutes. Insurers have built huge customer bases as a result. Investment revenue has provided a reliable boost to profits. This easy life led to a complacent refusal to modernise. The industry is still astonishingly reliant on human labour. Underwriters look at data but plenty still rely on human judgment to evaluate risks and set premiums. Claims are often reviewed manually. Den Rest des Beitrags lesen »

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